Circular Economy

As an answer to the problems of the current linear economy, the circular economy has been presented. It is an economy that has new business models which will change the current model with as result: closed loops on materials. The linear economy (take-make-dispose) brought wealth through sales transactions that are one-way tickets. These one-way tickets are responsible for scarcity of resources, waste and pollution problems and enormous costs in the public domain for restoration of ecosystems and measurements to create a resilient society that is able to handle the consequences of this one-way-system.

The circular economy is a systems change that closes the loops of materials: resources are temporal part of a product and at the end of life or end of use, the resources will be available again for new products or next products. This will be a complex system, since there are almost no direct relations between sourcing and next phases of products. That complexity makes circular economy an interesting challenge!

Naamloos

illustration 1 Ellen MacArthur Foundation, 2012

The Ellen MacArthur Foundation[1] in cooperation with McKinsey developed this schedule of the circular economy. It shows two circles: the biological nutrients and the technological nutrients. Both kinds of nutrients can be used in production. Be aware, both circles are based in the global ecological system, so directly related to questions on natural capital, biodiversity and ecosystems preservation/development.

The biological nutrients are used in cascades in order to gain as much value as possible from them. One could say: use them first ‘high brow’ and later on more ‘low brow’. In the end these materials can add value to the soil after composting or digestion. Quality of the soil is the key factor in this circle, because we need fertile soils for future food and feedstock.

The technical nutrients can be in more or less closed loops also. After the first phase of production products can be maintained, reused, remanufactured or recycled. In the recycling the circular economy implements the quality of resources: up-cycling and not down-cycling.

The classical waste system is a leakage that can and should be minimized. Though the waste sector sees potential positive uses also for down cycled materials or non-retrievable materials such as energy-production. The solution for minimisation lies in the Cradle-to-Cradle way of working in industry and production as described and introduced by Michael Braungart and William McDonough: re-use, repair, re-gain, re-sourcing and up-cycling.

There is a new economic model that helps on a systems level to facilitate these changes, throughout this new approach of the materials loops. It was developed by prof. dr. Walter Stahel[2]. He introduced the concept of ‘performance based contracting’ in which there is no ownership for the user of a product, the producer keeps ownership and the end user pays a fee for its performance. This is fundamental in the new economic arrangements of the circular economy. It implies better possibilities for producers to have control over their resources; it will bring focus on maintenance, reuse, refurbishment, remanufacturing and mining for existing minerals in their own products.

As a living example the change in business by Philips can be illustrative. In 2010 the Dutch architect Thomas Rau, partner in the One Planet Architecture institute and TurnToo, asked Philips to provide his office with light. That doesn’t seem to be a strange question, since Philips is selling lamps. But he asked them to provide ‘light on the desk’ which resulted in a performancebased contract for 600 lumen during 1500 hrs per year. Philips took care of the installations needed including the electricity bills. Within a year the office was 40% more efficient on their energy use for light and after two years 60%. Philips was and is responsible for the techniques, Rau just pays Philips for the hours ‘light on the desk’. Philips owns the materials and so builds a ‘resource ‘bank’. This is also an excellent example of the 'power of one' for creation of change. It starts with one person with an idea, strongly convinced of its possibilities and consistent efforts to create collaboration. It worked!

In a circular economy there is no direct discussion on ‘efficiency’ (doing 'better') because of the need of an effective (doing 'good') systems change. Resources are kept in the loop and that makes ‘waste is food’ to reality.

ICE in the circular economy

ICE embraces the Ellen MacArthur Foundation’s basic view of a circular economy as “an industrial system that is restorative or regenerative by intention and design. It replaces the ‘end-of-life’ concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems, and, within this, business models” (EMF, 2012). There is a distinct difference also: we see the economical development of the new business models as the most important motive for change. This is the driver for entrepreneurs and in this era entrepreneurship is directly connected to 'do good'.

One of the drivers for creating a circular economy is resource scarcity. For many materials, security of supply and the risk of unpredictable price fluctuations are increasing issues despite the existence of sufficient physical stocks or reserves.

While mineral resources never run out completely, economically recoverable reserves will sooner or later become depleted, especially regionally. Besides saving valuable resources, the circular economy can create jobs and strengthen our economy with business opportunities worth hundreds of billions of euros for the EU alone. And last but not least, ICE attaches high value to the capacity of a circular economy to reduce environmental impacts. Recent research shows that Circular Economy will be of a strong benefit for the change needed in the Climate Crisis: fundamentally through better product management (manage and preserve the embedded energy of products and materials).

There is also a fundamental reason to address the climate-crisis, not just by governments but also by businesses/entrepreneurs: circular business models potentially bring a solution by maintaining the 'embedded energy' of products, a core characteristic of circular economy. Depletion of products and materials brings the embedded energy in the global system including all carbon, one of the major sources of the climate crisis. So, keeping products and resources on the highest possible value-level means less loss of carbon. Calculations show that a full circular economy would solve about 60% of the climate crisis.

ICE’s ambition is to accelerate and guide the transition to a circular economy. Based on our knowledge of how to overcome obstacles for circularity, we assist companies, philanthropies and governments/agencies to develop and implement circular economy roadmaps for their organisation, chain or region. We do this by offering information and inspiration, followed by implementation and innovation. Unifying but disrupting where necessary, always with a perspective on the future of the organization.

We are experts in stakeholder engagement, the use of system models, long-term scenarios, sustainable development and ‘ecomimicry’. ICE has a track record in dealing with stakeholder power to realize disruptive interventions leading to win-win solutions.

Governance

Since the actual governance is based on the existing model of the economy, we see the need for new paradigms in the governance for the circular economy. ICE relates this to the ‘living system’ concept on which circular economy is based. In living systems the relations are key, as well in their reliance, adaptivity, connectivity as resilience. ICE has a focus on using ecological insights (ecomimicry) as a key to new governance in companies, governments and society. By using the concept ‘mimicry’ ICE sees many possibilities and inspiration for new governance.

Activities include(d)

  • Joustra was 'Head of Circular Transformation' for C&A-Foundation, building a strong Theory of Change including an extensive program on interventions (in the Fashion sector) (2017-2020)
  • Funding member of the Dutch Realizing Acceleration Circular Economy (RACE) Coalition, a cooperation between MVO-NL, Circle Economy, Accelaratio, De Groene Zaak, Het Groene Brein, ICE and the Ministry of Infrastructure and the Environment (2015-2017)
  • Douwe Jan Joustra is partner in the RACE program for Circular Design and works for Het Groene Brein  (2016-2017)
  • ICE and OPAi (One Planet Architecture institute) joined forces. Per 1 August 2014, ICE is the leading partner (2010-2015)
  • ICE became partner in IMSA (Institute for Environmental Systems Analysis) (2015-2016)
  • ICE was partner in Innovatiepartners (2016-2017)
  • Projects for our clients.

 Publications

 Presentations

Have a good read

In National Geographic an article on Circular Economy was published with an overview of many technical solutions: Is a world without trash possible?

ICE team

Douwe Jan Joustra

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e djj@ice-amsterdam.nl

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+31 6 131 959 68

 

[1] ‘Towards a circular economy’ part 1 & 2, Ellen MacArthur Foundation, 2012 & 2013

[2] “The Product-Life Factor”, prof. dr. Walter Stahel, Product Life Institute, Geneva, 1982